From the Publisher: Avoiding missteps

As J.C. Penney has shown, Employing new business strategies are great, as long as they do not alienate shoppers.

I just cannot get J.C. Penney out of my head.

The troubled Dallas-based chain has very little to do with the grocery industry. It does not sell cereal, milk, candy or health and beauty care items. It does not market produce or meats or even magazines.Seth Mendelson

Yet, Penney remains a poster child for what happens to a retailer when its executives forget who they are and what its most loyal shoppers expect of them. As reported here and elsewhere, Penney has run into rough times due to a combination of poor merchandising decisions, intense competition and the desire of some executives to put their own stamp on what the chain should be.

Nowhere did these officials take the time to listen to their customers and gauge what they needed and wanted. Penney, led by now-ousted CEO Ron Johnson, simply developed a new strategy that had nothing to do with what their shoppers were looking for and everything to do with what some executives in an ivory tower thought might play well to their friends on the golf course or during dinner at the country club.

Now the chain is paying the price. While Macy’s, its closest competitor, posts solid sales and profit increases, Penney continues to wallow in reduced expectations from Wall Street, Main Street and its suppliers, many of who simply are scratching their collective heads and wondering what direction they should go. Same store sales are weak and the word is employees are demoralized and worse, confused, even after the news of Johnson’s dismissal.

Consumers are even more mystified. Not too long ago, there was such a thing as a J.C. Penney shopper. They looked for promotional deals on merchandise that was mainstream. Frankly, I have to believe that they did not spend too much time searching for alternatives. That, of course, has all changed and it will take a lot of money and a lot of promotional activities to get these shoppers back again.

What should other retailers take from this misadventure? For supermarket executives, this should serve as an excellent history lesson on what not to do when maintaining a retail business. Your consumers are paramount to your ultimate level of success. Give them what they want—and normally that is simply a convenient shopping experience with the right products at the right price—and you will go a long way to maintaining their loyalties.

Forget that they decide your ultimate fate and you risk losing their attention and, eventually, their loyalty. That, by the way, quickly transfers into sales and profits.
So the next time some guys gather around a water cooler in the executive wing to discuss new merchandising strategies, one can only hope that they will also take the time to do the research that will determine how these new policies and programs impact their shoppers.

Penney did not fall apart in a day. It took a great effort to get to where it is, just like it will take a great effort to get back again. Try to avoid these steps, if you can.

This entry was posted in 2013 06 Article Archives, Columns and tagged , , . Bookmark the permalink.